KBR Wins Contract For Pieridae Energy's Goldboro LNG Project

KBR, Inc. (NYSE:KBR) has received a contract from Pieridae Energy Limited for an engineering review of costs for a two train 10 MMTPA LNG facility at Goldboro, Nova Scotia.

Under this Technical Verification and Open Book Estimate (“OBE”) engineering, procurement, and construction (“EPC”) contract, KBR will examine changes to initial plans for Pieridae Energy’s C$10-billion ($7.5 billion) Goldboro LNG project, which is capable of exporting up to 1.4 billion cubic feet per day. Pieridae expects to start construction on this facility in East Canada sometime in 2019.

Being active in the LNG industry for more than four decades, KBR remains committed to boost global LNG production for environmental reasons and has delivered about one third of the world's current LNG production capacity.

The company enjoys a robust track record of developing LNG projects in Canada. In the markets served by the company, it has significant opportunities that include Magnolia, Cheniere Midscale, Nigeria LNG, Woodfibre and others. Given the encouraging scenario, the company plans on reaching the final investment decision on the project in 2019. With this latest contract, it will continue to foray into the Canadian LNG market through Hydrocarbons Services business.

The company foresees decent opportunities in downstream petrochemical and ethylene projects, along with various emerging small-scale LNG projects in North America that are expected to boost the segment’s overall performance. KBR anticipates persistent growth in the segment, with margins likely to come in the mid-20s in the near future.

Recently, KBR received a pre-Front End Engineering Design (Pre-FEED) contract from Mexico Pacific Limited for a midscale LNG liquefaction project in Puerto Libertad on the Pacific coast of Mexico. Per the contract, the company will provide Pre-FEED services and cost estimate for the project.

Hydrocarbon Services backlog has remained steady over the last five quarters. Of the total backlog, 75% represents service businesses that include high-end technical consultancy, pre-FEED, FEED, PMC, and sustaining capital construction services and maintenance.

Share Price Performance

Over the past three months, KBR’s shares have gained 27.9%, outperforming its industry’s rally of 23.8%. The price performance is backed by an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in seven of the trailing eight quarters. In fact, fourth-quarter 2018 marked the company’s 8th consecutive quarter of strong revenues, earnings and cash flow; impressive year-over-year backlog growth; and the successful integration of SGT and Aspire. Markedly, earnings estimates for 2019 have moved 4.4% upward over the past 60 days, reflecting analysts’ confidence in the company’s bottom-line growth potential.

Zacks Rank & Other Key Picks

Currently, KBR carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the Zacks Construction sector include Quanta Services, Inc. (NYSE:PWR) , Apergy Corporation (NYSE:APY) and Armstrong World Industries, Inc. (NYSE:AWI) . While Quanta Services and Apergy sport a Zacks Rank #1 (Strong Buy), Armstrong World carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Quanta Services’ earnings for the current year are expected to increase 25.3%.

Apergy has a solid three-five year expected EPS growth rate of 22.5%.

Armstrong World’s earnings for 2019 are anticipated to grow 21.9%.

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